Source: ForexYard
Euro zone economic data out this morning shows the French and German economies performed in-line or better than consensus forecasts. However, traders need to remember that the data is not forward looking and is most likely already included in the value of the EUR. The was ZEW economic sentiment survey is forward looking and shows German investor confidence tumbled to a 3-year low, further highlighting fears of a euro zone recession.
French Q3 GDP climbed by 0.4% on consensus forecasts of 0.3%. The bullish tone of the data was reduced as a downward revision to the Q2 GDP showed the French economy contracted by -0.1% from the previous release of 0.0%. Despite the negative growth in Q2 today’s data does provide some spark of hope that France will meet its deficit reduction targets.
A positive note in today’s economic data releases was the German Q3 data which came in as expected at 0.5%, rising from 0.3% in Q2. However, the worrying part of today’s data barrage is the German ZEW survey which missed forecasts by a mile, falling to -55.2 from -48.3, on expectations of a decline to -51.8. The survey is yet another sign of a potential slowdown of euro zone GDP in Q4.
With continued pressure on Italian and Spanish bond yields the EUR/USD is trading near its lows for the day at 1.3530 with near-term support at 1.3480 from the November 10th low. A break here may open the door to the October low of 1.3145. Resistance is found at the overnight high of 1.3650.
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